Print this article | Return to Article | Return to CFO.com
How finance chiefs can get the real story about their companies' problems and prospects.
Kate O'Sullivan, CFO Magazine
February 1, 2010
Many CFOs know what it's like to ask a room full of employees if they have any questions — only to be met with deafening silence. Even when the finance chief earnestly solicits queries, employees often clam up. Perhaps they're not engaged. Perhaps they doubt an honest answer. These days, they simply may be afraid of what they might hear.
"It's a very difficult setting with the whole company there, with the whole range of company hierarchy. You're not going to get real questions in that setting," says Michael Roberto, a professor of management at Bryant University in Rhode Island and the author of Know What You Don't Know: How Great Leaders Prevent Problems Before They Happen. "Many executives say 'My door is always open,'" Roberto adds. "But bad news does not come through an open door."
In this volatile environment, where any insight into performance can be critical to planning and forecasting, how does a finance chief stay in tune with operations and learn what employees really think? How can he avoid the separation from the day-to-day business that so often isolates the executive suite? To learn the bad news, Roberto says, a CFO must walk out the door and hunt for it.
"There are a whole bunch of natural filters in an organization," Roberto explains. "It's not because people are necessarily hiding things, but as information moves through the hierarchy of a company, it gets packaged, streamlined, and analyzed." As a result, the "news" that arrives at the CFO's desk has usually been cleaned and polished. And distorted.
Laying a Foundation
Creating a culture in which employees feel comfortable speaking up is the first step in breaking out of the trap of executive isolation. Building such a culture can take time, and often results from many subtle signals rather than a splashy companywide push for openness or dialogue.
The budgeting-and-planning process is one obvious opportunity to send those signals. For many employees, it is their most significant interaction of the year with the finance department. Yet it is often a dysfunctional one, and many finance chiefs are guilty of rewarding the overly optimistic or suspecting that bearers of bad news are simply trying to lowball their targets. (This is a problem that Ford Motor has gone to great lengths to address; see "Eat My Dust.")
"You have to make clear to people that you're not going to shoot the messenger," says Roberto. "You don't want people to feel like they're going to get blamed or punished for sharing bad news or disagreeing with something. You want the data, and you want people to know that you'd rather hear the news sooner than later."
Regularly talking with employees and working to build a personal connection with them can also help send that message. Trivial chitchat can blossom into a trusting relationship between CFO and employee. John Currie, finance chief and treasurer at Lululemon Athletica, an athletic-apparel retailer based in Vancouver, works in the company's stores once a week. Although the effort began mainly as a way for executives to interact with customers, it also helps them get to know the staff at the company's 119 locations. "We try to spend time in informal ways with the staff," says Currie. "Coming in and having a stiff Q&A wouldn't be productive. We might meet them for breakfast or take them out of the store to grab a coffee. We try to make ourselves visible and accessible."
At the company's corporate headquarters, Currie also tries to wander out of his office as much as possible. "I hate a day that's filled with scheduled appointments. I love to have a free hour and just go to another floor and poke around," he says. Casual conversations about an employee's weekend "can really lead to other issues, problems, and feedback."
The Personal Touch
Pamela Craig, finance chief at Accenture, the global consulting firm, tries to arrange meetings with small groups of employees wherever she travels. "I like the person-to-person contact," she says. "It's very easy to just sit at your desk and look at a screen, but for me there would be so much less job satisfaction if that was all I was doing." Craig says she rarely has difficulty getting a group — whether of women consultants, finance employees, or a particular project team — to open up, but she does employ a few techniques for warming up a room and getting the conversation going, some of which are remarkably simple. "I always try to remember to smile," she says. "The first thing people are looking for is whether you are a human being." To that end, she typically begins with a personal story; at a recent meeting in Minneapolis, she told the group about caring for her aging parents. She also makes lots of eye contact. "I'm very, very tuned in to whether anybody is glazing on me," she says.
Such self-awareness plays an important role in Currie's interactions with staffers as well. He says he constantly reminds himself that many people enter a conversation with him with a preconceived and often inaccurate notion of how he, as the CFO, thinks. "If I'm conscious of that, it helps me be aware of their thought process," he says. For example, he says that people frequently expect him to be poised to veto any spending requests. "I think they are often surprised by how open I am to spending on a well-thought-out investment," he says.
Asking the Right Questions
Structuring questions effectively and providing comfortable forums for debate also help to solicit honest feedback. Gary Cohen, a founder of executive coaching firm CO2 Partners and the author of Just Ask Leadership, urges executives to ask what he calls "legitimate questions" to which they truly don't know the answer, rather than rhetorical questions or queries on topics about which they already have strong opinions. "Ask thoughtful and insightful questions to engage your people, to align them and motivate them, and not just to play a game," he says. Too often, executives question employees simply to confirm their own thinking or as a type of quiz, not because they're truly interested in the answer, he says.
Roberto encourages CFOs to create small group settings where they can intentionally play devil's advocate on an issue. "Provide an invitation for people to give another viewpoint," he says. For example, in a meeting with a mergers-and-acquisitions team, the CFO could ask what's wrong with the assumptions in the valuation model or challenge the idea that the deal should be done at all. In a broader group, the CFO could foster conversation by asking employees where they think the organization's biggest risks are or by asking why a new product launch might be a mistake. "These are questions that give people license to express skepticism or bring data that might show that customers are not reacting well to a product," he says.
At Lululemon, Currie strives to solicit constructive criticism with well-crafted questions. "The worst thing we could do is come in and ask a question like, 'Is everything going well? Are we doing everything we can for you?' That leads to the bland response, which is, 'Yep, everything's fine,'" he says. Instead, "I'm more likely to say, 'What are the top three things that we're not doing that we could be doing to make your experience better?' The question is worded in a way that encourages dialogue." Currie's regular visits to stores can also provide the starting point for some specific questions. For example, in a low-volume store, he might comment on a large assortment of colors and ask whether employees think the variety of inventory is necessary.
In her meetings around the world with Accenture staffers, Craig challenges employees by bouncing hard questions back to them. "People love to give their perspective on things," she says. When someone poses a particularly tough question, "I will often turn it back to them. It's amazing how people step up to that." In general, though, "I always try to take the questions. I think we owe it to employees to attempt to answer or to say, 'I don't know, I'll get back to you,' or, 'That's a great thing to think about and I will.'"
Finance chiefs in particular may need some time to get used to the questioning approach. "CFOs are really good at knowing things," says Cohen, citing their subject-area expertise and the fact that many hold specialized degrees and certifications. "But," he says, "they need to learn how to help other people think through things and move them to action."
Even those who are more used to a command-and-control style can make the transition to a more open method of communication, says Cohen. "Try it," he says. "If you err on the side of asking questions versus telling, you'll find that you do better. Just start doing it."
Kate O'Sullivan is senior editor for strategy at CFO.
It Can't Hurt to Ask
A thoughtfully worded question can bring forth ideas from employees that can provide a valuable new perspective or even unearth surprising data about the business. A few suggestions:
• How would it benefit the business if we were able to generate this report a week earlier? What would it take to do that?
• Why should we approve this capital request?
• Why should we reject this capital request?
• What are our assumptions about this deal?
• What are we doing — in the monthly close process, in the budgeting process, in the planning process — that's wrong?
• What are the three things you can think of that would help us improve working capital (or another financial goal)? How would you prioritize them?